There’s a Black Market for Eli Lilly’s Unapproved GLP-1 Drug. Here’s Why That’s Bullish
Eli Lilly (LLY -2.81%) is one of the undisputed leaders in the GLP-1 market. The company’s tirzepatide, sold under the brand names Mounjaro (for diabetes) and Zepbound (for chronic weight management), is the world’s best-selling GLP-1 medicine. Tirzepatide has been powering Eli Lilly’s recent strong financial performance. However, the company is working on next-gen GLP-1 medicines that could be even better. One of them, retatrutide, isn’t even approved yet, but there is already a black market for it. Here’s why investors should take that as a bullish sign.
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Fantastic clinical trial results
First, some background on retatrutide. It is a triple agonist, meaning it mimics the actions of three separate gut hormones: GLP-1, GIP, and glucagon. There is no such medicine currently approved by the U.S. Food and Drug Administration (FDA). Tirzepatide, for instance, mimics the action of GLP-1 and GIP, an approach that has already proved highly successful. Retatrutide’s triple-pathway mechanism could, in theory, yield even better outcomes. And so far, clinical trial data support that. In a phase 3 study, retatrutide led to an average weight loss of up 28.3% in 80 weeks.
Putting aside the difficulty of comparing across clinical trials, retatrutide’s performance blows tirzepatide’s out of the water. The latter’s mean weight loss was 20.2% over 72 weeks in one study. Retatrutide’s weight-loss efficacy numbers were so impressive that some have compared them to those typically seen with bariatric surgery. That’s not all. Retatrutide also significantly reduced osteoarthritis pain in obese patients while delivering excellent weight loss in patients with diabetes. Clearly, this medicine is destined for stardom.
Eli Lilly goes after the black market
Eli Lilly recently said that it would submit an application to the FDA for retatrutide’s approval in the first quarter of 2027. However, there is already a black market for the medicine. How is that possible? Since the drug’s chemical structure and methods of making it have been publicly disclosed (including in patent filings and the relevant peer-reviewed literature), other manufacturers can make it.
They wouldn’t bother to do so unless there was a demand for it. And it appears that there is, likely because of the medicine’s outstanding clinical trial results. In fact, Eli Lilly recently filed lawsuits against several companies that are offering patients retatrutide via social media channels.
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Gross Margin
83.40%
Dividend Yield
0.52%
What this means for investors
If demand for retatrutide is already high enough to sustain a black market for it even before it’s approved, imagine how things will be once it does earn regulatory approval. The medicine will target not just diabetes and weight loss, but several other indications as well, such as chronic low back pain, obstructive sleep apnea, and metabolic dysfunction-associated steatotic liver disease. It won’t just cannibalize Zepbound sales, either. As Eli Lilly showed with Foundayo, an oral GLP-1 weight loss medicine, it can expand the market with new, differentiated launches: Most of Foundayo’s patients had never taken GLP-1 drugs before.
It could achieve something similar with retatrutide and target patients who need more powerful weight-loss options than the current market offers. Further, Eli Lilly has several other weight-loss candidates that will also target new niches. For instance, the company’s eloralintide is being investigated in weight management. This medicine mimics the action of the amylin hormone. Eli Lilly has found in a phase 2 clinical trial that eloralintide appears to have a better tolerability profile than GLP-1 medicines, while posting similar efficacy numbers.
It could be particularly appealing to patients who want weight loss drugs with fewer side effects. Eli Lilly’s deep pipeline suggests that, even as competitors launch brand-new products in this niche, the company should remain a leader. So, the pharmaceutical giant should continue posting strong financial results over the medium term as it rides the wave of the rapidly growing GLP-1 market. That’s why the stock is still a buy.
